The left's idea of 'fair' doesn't mean the same thing as the right's idea of 'fair' yet we're both using that same word in the debate, so how can the public tell the difference?


Ad astra per aspera

Broken banks put state back in the driving seat
By Philip Stephens

We are watching a bonfire of the old orthodoxies as well as of the vanities.

(...)

Something big is happening. What started out as a series of pragmatic ad hoc responses by governments and central banks is moving the boundary between state and market. Politicians are now overlaying expediency with ideology. Government is no longer a term of abuse.

(...)

The politicians, meanwhile, are reclaiming some of the language of that earlier age. Higher taxes on the wealthy are no longer taboo; regulation has been rehabilitated; markets can fail.

It seems only yesterday that the onward march of the Anglo-American model of liberal capitalism - small government, fiscal prudence, deregulation, flexible and open markets - set the shape and tempo of the global economy. Some European governments fought a long rearguard action against what one of my French friends calls the hyper-capitalism of the "Anglo-Saxons". But to a greater or lesser degree all made their accommodations.

In the US and Britain, the centre-left learned it could win elections only by accepting the Reagan-Thatcher settlement. Bill Clinton, a Democrat, wrote the requiem for big government.

(...) As for markets, there was no one more scornful than Mr Brown of the continental European model of a more regulated social market capitalism.

That was then.

(...) The old capitalism (and by that I mean the variety that until this year we called the "new" capitalism) was predicated on a financial system that created an endless supply of cheap credit. It will take more than a cyclical upturn before politicians again allow banks to manufacture money on such an epic scale.

That will demand deep structural adjustments in economies kept afloat on the sea of credit. The US, Britain and the other boom-to-bust economies will find the world no longer willing to finance their domestic housing and borrowing booms. Voters, meanwhile, will absorb the message that it is no longer a self-evident truth that ever more liberal markets deliver painless prosperity.

Even if it was never self-evident, it' s good to see it discredited, in such stark terms: "boom-to-bust economies", "endless cheap credit" , the "Anglo-American model" because NuLabor is inextricably tied to all of these.

How Britain flirts with disaster
By Martin Wolf

Is the UK on the road to disaster? Those who believe it is insist that it is mad to tackle a calamity caused by excessive borrowing with still more borrowing, this time by the government as borrower and lender of last resort. These criticisms are wrong and right: wrong, if the government remains creditworthy; right, if it does not. So what did Monday's pre-Budget report tell us about the government the UK now has? Should you trust it with your money, or not?

A creditworthy government can shift excess debt from the private sector on to the backs of taxpayers. An uncreditworthy government cannot. If the cost of debt becomes too high, the latter will be forced into default, either openly or via inflation. In the UK's case, inflation would be triggered by a flight from sterling.

(...)

In short, the Treasury is telling the world that the view of the structural fiscal position of the UK it held last March was nonsense.

(...)

First, the Treasury's view that the last cycle ended in 2006 seems quite ridiculous. The correct view is that the UK has been caught in an unsustainable supercycle, with a once-in-a-lifetime bubble in global finance and domestic housing. It is only now in the downswing. The cyclically adjusted fiscal deficit, properly measured, was far larger than believed for at least a decade. So fiscal policy should have been much tighter. If it had been, the UK would be in far better shape today.

(...)

Everything depends on avoiding a deep and prolonged recession. In that event, markets might even reject the explosive increase in government debt. Letting bank lending stay frozen is not an option. The government surely knows that. Do the bankers?

In other words, Brown has been spending money he did not really have, and will now leave the bill to the UK population, in the form of tax increases, inflation or both.

In the long run, we're all dead. John Maynard Keynes

This is nice rhetoric, but what about a new economic terrain? What is the economic science european "left" actually follows? Do they ever had a one? Even Keynes has been them a "radical" for years. They simply make up things as they go. "Jobs" have not liberated working class. There are "jobs" to the end of the world, but "working class" and "employment" are structural entities in a state capitalistic system. How about the left starting to give i.e. housing to people without land expenses? Couple of tons concrete cannot be so valuable, that people have to take life mortgages to have a place to live.

But the Tories are in an even worse ideological bind, because their argument has always been that Brown has been too socialist, too interventionist, and that the free market needed to be given more freedom.  So the political three card trick which Labour has to pull off (note the hasty dropping of the New Labour tag), is to trade on Brown's stature as a champion of the free market (within Labour) and allow him to carry out the greatest socialising of "the commanding heights of the economy" since Bevan and co. in the 1940's.

And having done so, Labour has to dump Brown - probably for a "fresh face" like Miliband, and say - "it wasn't us guv" and "we got rid of the old codger" and now we are going to do (what we have always claimed to do) and that is look after the little guy.  It's called re-branding, and given that, at that stage, the little guy will really be hurting, they may have some small chance of pulling it off.

However that's only because the Tories haven't demonstrated any great experience or competence either, have never been known to look after the little guy, and that their amalgam of tax cuts and Euroscepticism - whilst playing to the populist anti tax/Brussels sentiment - may not entirely provoke trust and credibility either.  But with the support of the MSM and the English middle class, they will probably pull it off.

No doubt they may claim they will renegotiate Britain's relationship with Europe - and if Lisbon hasn't been ratified by then, it won't be.  But I wish them luck - the EU may actually develop a backbone and tell them to go off and negotiate with someone else - something that could also happen to Ireland if it is seen as the ultimate reason for the failure of Lisbon.  Sarkozy may be no De Gaulle, but he might not be averse to replicating the old man's "Non" to any negotiation.

With Sterling in steep decline, we may also see Euroscepticism losing some of its popular appeal in Britain.  Burning bridges to Europe might not seem such a smart move in a time of crisis.  It will be interesting to see too what extent Obama prioritises relationships with the EU/GB, because the close Blair/Bush identification won't have helped Britain's "special relationship" with the US any in Democrat eyes.

An ignominious dumping of Brown by the English Middle class will also not go down well in Scotland and will revive calls for independence there.  A Cameron led Britain may have to be more concerned with keeping "Britain" "Great" rather than reshaping the EU.  It makes sense for Scotland to seek independence within the EU is that means securing its own cohesion/structural funding, Commissioner and representation in Council and Parliament.

We live in interesting times...

notes from no w here

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